A few months ago, 60 Minutes re-ran a story on the 2nd biggest fraud since Bernie Maydoff, with reporter Steve Kroft. It was an interview with Marc Drier, whose ponzi scheme defrauded people of almost $400 million.
I want to read you a section of the interview, and then translate it to you and me:
Kroft: So you were digging yourself into a hole?
Dryer: Very much so. You start with something that is manageable and small. You know it’s wrong, but you think you can fix it and you can’t get out of it. It becomes quicksand. I had to keep meeting obligations that became bigger and bigger. (I was) creating an illusion, all mortgaged to the hilt.
I recognized in the last couple of years that what I saw as a $20 million mistake had grown into a mistake of a few hundred million dollars. And then, I did some increasingly irrational things, because I wasn’t thinking clearly…(and) I’ve lost everything.
Now, let’s translate that to the financial situation so many people face:
So you were digging yourself into a hole?
Very much so. I started with some borrowing that was manageable and small. You know it’s wrong, but you think you can pay it off soon, but can’t get out of it. It becomes quicksand. I had to keep meeting obligations and payments that became bigger and bigger each month. (I was) creating an illusion of a lifestyle that was all mortgaged to the hilt.
I recognized in the last couple of years that what I saw as a small mistake had grown into a mistake of (however many dollars).
And then, I did some increasingly irrational things, because I wasn’t thinking clearly. Like taking cash advances, stretching my car loan, getting a line of credit, living on my overdraft, going to a Payday lender, getting behind on my bills…(and) I’ve lost everything.
That’s millions of families that don’t or won’t do a budget. Families that refuse to live on less than they earn, and still kid themselves into thinking that loans and borrowing are a blessing and part of a solution.